Taxi is a perfect market (exchangeable, homogenous product, low barriers of entry) so all profits will be competed out. But since drivers also need to make a living, everywhere in the world they have lobbied for protection so that they can keep some of the profits. Without that, they would work for (almost) free since many people would have an incentive to enter the market. Since they are also providing a service to the public governments have granted them extra protection. This is a system that has been working for a long time, and in the long run, Uber will not be able to change this.